Black Box Intelligence recently released its State of the Restaurant Industry Q4 2024 report. According to the report, resilience and value are driving success as 2024 comes to a close. Some of the positive trends noted include positive growth in off-premise sales.
Here, we’ll explore the good and the bad and what to expect according to this data and their latest analysis and insights.
Traffic Patterns
The Black Box Intelligence analysis revealed resilience and stability in both traffic and sales for quick-service restaurant brands. The price-conscious consumer is tagged as the reason for this segment’s continued consistent earnings.
This summer, QSRs went all-in on value meals. Fall has witnessed the arrival of apple cider donuts, pumpkin spice lattes, and Spicy Honey Pepper Pimento Chicken Sandwiches.
Fast casual dining has seen a small boost in traffic. This activity is considered a backdrop to the narrowing price margins between the fast casual and quick service segments. According to Placer.ai, both categories remain popular among households earning $75,000 to $100,000.
Additionally, these segments are increasingly similar, with fast-casual chains adding drive-thrus, and QSRs increasing both prices and quality. Fast casuals actually outperformed QSRs during the first half of 2024, coming in at a 3.2% year-over-year visit growth compared to 0.4% for fast food brands.
As expected and in comparison, casual and family dining experienced underperforming traffic and sales.
Natural Disasters
The tropical cyclone, Hurricane Helene, caused widespread destruction and fatalities across the Southeastern portion of the U.S. in late September. It was the deadliest to hit the mainland since 2005’s Katrina. Hurricane Milton, the most powerful tropical cyclone in 2024, made landfall in Florida just two weeks later.
Restaurants in Florida, Georgia, and South Carolina experienced a drastic reduction in sales, with some registering a loss of up to 10%. Despite this, Blackbox reports a stronger than anticipated resilience, noting restaurants’ ability to adapt and recover.
Take Out & Delivery
Their analysis also reveals strong off-premise sales, with limited-service restaurants experiencing an 8% growth year-over-year. Full-service restaurants were also positively impacted by rising delivery sales. This trend is expected to continue into 2025.
So, what are restaurants doing to catch the tailwind? Many are investing in online ordering systems like Chowly, the off-premise platform that integrates the POS system, online ordering, and more. They are also updating delivery menus to improve the customer experience and meet the growing demand. Some of the most popular foods ordered for delivery include burritos and burrito bowls, tacos, create-your-own pizza, and lemon za’atar fried chicken bao.
Outpacing Other Industries
While it may not feel like it, federal retail sales data showed restaurant and bar sales increasing by 1% month-over-month in September, outpacing other industries. Retail sales increased by 0.4%, demonstrating consumers’ continued preferences for experiences over objects. According to Restaurant Business, this figure represents the best performance for restaurants since November.
The Consumer Sentiment & Online Reputation
According to Black Box, the perceived value and the importance of it are driving consumer reviews. Their priority, as seen in reviews, is consistency, quality, and value. The analysis also reveals a direct link between guest sentiment and weekly sales, and that link is significant. In full-service restaurants, establishments that received high ratings saw weekly sales hit the $100,000 mark compared to lower-rated restaurants that reached a mere $30,000.
The Restaurant Workforce
A continuing challenge is retaining staff, especially when it comes to full-service establishments and managerial roles. As we know, this high turnover rate directly impacts the bottom line.
The restaurant employee turnover rate measures how often employees leave their jobs. So, an hourly turnover rate of 16.9% in full-service restaurants means that about 17 hourly employees quit out of 100. Attracting and retaining skilled staff has always been a challenge and continues to be so today.
What are the keywords for the restaurant industry at this time? Cautious optimism and potential challenges.
